Publications

Best practices for an independent review process for high-dollar, high-risk cost estimates

Shirley, Gregory C.; Banks, Jeremy L.

We have discussed the key areas of the IR process that should not be circumvented if an organization is to achieve a high level of assurance in high-dollar, high-risk cost estimates; lessons learned; and possible solutions to improve the process. In summary, the best practices described are to do the following. Develop a corporate policy for review of cost estimates based on TPC and potential financial and reputation risk; Develop a database of qualified, experienced personnel, who can perform well as IR team members; Spell out the process for approval of review team members, including the executive approval process; Address review team availability by developing review team member alternates; Increase lead-time notice on high-dollar, high risk estimates by developing an advanced notice system with internal organizations; Improve coordination of the estimating team's responses to the review team's questions and concerns; and Develop alternatives such as representatives and electronic briefings to alleviate challenges in scheduling executives for cost estimate briefings. Each organization has its own needs, culture, and level of maturity. If you have an IR process that works, great! If not, we hope that we have sparked your interest in developing a process that works for your company. The goal is to continuously improve and further refine the process to meet the needs of both external and internal customers. Sandia is a multiprogram laboratory operated by Sandia Corporation, a Lockheed Martin Company for the US Department of Energy's National Nuclear Security Administration under contract DE-AC04-94AL85000.